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TMI Blog1978 (2) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... roduction for delivery at the place of manufacture or production. (4) Factory is defined by section 2(e) to mean any premises, including the precincts thereof, wherein or in any part of which excisable goods are manufactured subject to any manufacturing process connected with their production. 2. We are concerned with the Act and the Rules as they existed from 1-3-1970 when the goods produced by the petitioner became liable to duty on the insertion of entry 14AA in the First Schedule to the Act to 30-9-1975 when the Act was amended. The existing clause (b) of sub-section (1) of Section 4 of the Act is not, therefore, applicable to this case. Similarly, the residuary entry 68 making assessable to duty all other goods not elsewhere specified, manufactured in a factory but not excluded by the said item is also not applicable. 3. The undisputed facts are that the petitioner used to manufacture calcium carbide and sell the same till 1967. In the petitioner s factory various chemicals are manufactured by separate plants. There is an independent plant in which calcium carbide is manufactured. Since, 1967, however, the petitioner started using calcium carbide manufactured at its f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rit petition on the ground that what is manufactured by the petitioner is calcium carbide a mentioned in tariff entry No. 14AA of the First Schedule to the Act and as such is liable to ad valorern duty. This product was actually sold in the market till 1967 by the petitioner and even thereafter is goods within the meaning of the Act. The applicability of the Calcium Carbide Rules to this product does not arise as the petitioner does not transpore the Calcium Carbid, but uses the entire production for captive consumption in its factory. The packaging of the calcium carbide is not relevant in the present case as the entire calcium carbide production is used by the petitioner for the manufacture of acetylene gas. Compliance with the Carbide of Calcium Rules in respect of this product by the petitioner is not a condition precedent for the product to become excisable. At any rate, excise duty is levied on manufacture and not on sale. Calcium carbide of the like kind and quality is sold or is capable of being sold and is, therefore, assessable to duty under section 4(b) of the Act. The use of the calcium carbide for captive consumption by the petitioner amounts to its removal in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calcium carbide produced in the molten form is solidified and broken into cakes for use in the acetylene gas plant. The petitioner has four generators for acetylene gas, two of which are small and the other two are very big. The small generators are fed with calcium carbide of 1-80 mm size, while the bigger ones are fed with calcium carbide of 80-250 mm size. The petitioner points out in the rejoinder that on the pleadings of the respondents themselves 74 per cent of the production of the so-called calcium carbide of the petitioner is not commercially pure as per the Indian Standards Institution specifications. This would mean that the substance produced by the petitioner is sub-standard judged from the Indian Standards Institution specifications. This would, however, not necessarily make it unmarketable. The marketability would itself depend on the degree by which the product falls below the standard. It is not possible to lay down a hard and fast line as to when a sub-standard product becomes marketable and when it falls below the line of marketability. For instance, a car may be marketable even if it is not painted or it may not have a roof, but it may not be marketable if it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss be used for the generation of acetylene gas. Calcium carbide is used as an intermediate product or material which may not be otherwise marketable for the generation of the acetylene gas. (2) The second question is whether an article of the like kind and quality, as the product of the petitioner, is sold or is capable of being sold within the meaning of Section 4. Before Section 4 of the Act can be applied to the product of the petitioner, it has to be seen that an article of the like kind and quality is sold or is capable of being sold within the meaning of Section 4. Since the duty on this product is ad valorem, its value has to be found under Section 4. In the present case, it cannot be done unless it is shown that the product is sold or is capable of being sold. It is not disputed that after 1967 this product by the petitioner is not sold. The question is whether an article of the like kind or quality is sold or is capable of being sold. The words of the like kind and quality are important. They mean that it is not the calcium carbide which is actually marketable because it complies with the Carbide of Calcium Rules which is for consideration before us. On the contrary, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able goods are manufactured. On the other hand, it includes the whole of the premises in a part of which such goods are manufactured. At any rate the case of the petitioner is that the whole of the premises which comprise both the plants making calcium carbide and acetylene gas are its factory. It is not contended by the respondents that the calcium carbide plant constitutes a separate factory and the acetylene gas plant constitutes another factory. It cannot be said, therefore, that the so-called calcium carbide made by the petitioner is removed from the factory in which it is made. A perusal of Rules 9 and 49 makes it clear that the question of collection of any excise duty cannot arise unless and until the goods are removed from the factory. 8. We may conclude, therefore, that even if it is assumed for the sake of argument that for some reason or the other the calcium carbide made by the petitioner is goods and is, therefore, assessable to excise duty still the actual collection of the excise duty on these goods cannot be made unless and until these goods are removed from the factory of the petitioner. 9. For the above reasons, the writ petition succeeds, the impugned orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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